September 23, 2009
The Future According to RIPEC
It seems to me that the most important numbers from Katherine Gregg's Projo story about Rhode Island Public Expenditure Council projections on the state budget are the ones at the bottom…
The state’s overall budget for this year soared 12.9 percent over last year’s to a record-high of $7.8 billion with new federal dollars accounting for most of that new spending. With the added federal dollars, lawmakers were able to shave $275.9 million (8.4 percent) off the state-funded portion of this year’s budget....but for those who prefer absolute numbers, rather than percentages, there's this...The problem as RIPEC sees it: 0.3-percent growth in state revenues to support a 6.2-percent spurt in spending in 2010-11; 2-percent growth to support a 9.2-percent increase in required state-spending in 2011-12, after the stimulus dollars run dry.
Worst case, RIPEC foresees the state ending this budget year with a $60.6-million deficit — on top of the $61.7-million deficit left over from last year, and then accumulating deficits of $244.4 million next year and $483.8 million the year after that. If lawmakers are unable to close the gaps along the way, RIPEC predicts, the cumulative deficit would swell to $850.6 million by 2012.
The Obama stimulus cash was just the latest in a sadly long line of finacial rabbits the General Assembly has pulled out of their ....... hats. At some point they are going to find that hat empty and actually have to make some budget decisions based on reality.
Posted by: Phil at September 23, 2009 11:05 AMWe also spend more than twice as much per-capita than Massachusetts, and have a much smaller per-capita tax base.
This is bad. Why does our DOT spend $5 million per mile of highway per year, when Massachusetts only spends about $2.5M (which is still way above the national average)?
Has anyone considered that even with proper management and giant cuts, Rhode Island might be so far gone (look at that $10 -billion- dollar unfunded pension liability!) that we need to set a precedent, declare bankruptcy, and let a judge help reorganize the state?
We're clearly in a traditional 'death spiral' right now, if Rhode Island was a person (who owed over two years of their income in debt, and was spending more and more), I'd suggest bankruptcy and a total rebuild.
Posted by: mangeek at September 23, 2009 12:16 PMPhil pre-empted my comment. (To avoid a repeat of this, Phil, from now on, please run your comments by me first ...)
The stimulus money became yet another in a series of one time fixes that simply postponed for another year the promulgation of a responsible budget.